BETHESDA, Maryland: Due to ongoing supply chain issues, Lockheed Martin, which makes the F-35 jets, said this week that its 2024 profit will be below Wall Street expectations.

As a result of rising tensions between China and the Philippines, Russia’s ongoing war in Ukraine, and conflict in the Middle East, U.S. defense firms are seeing a notable increase in orders.

However, the sector is still being affected by COVID-19 pandemic-related disruptions to labor and supply chains.

Its production was hit by low availability of processor assemblies, solid-rocket motors, castings, and forgings, with its F-35 program being the worst affected, Lockheed said in October.

In the fourth quarter, the Bethesda, Maryland-based weapons maker’s net sales from the F-35 program declined by US$275 million from a year earlier.

However, because a software update on recently built jets requires final testing and approval, final payments for some F-35s, a keystone for the Aeronautics business’ margin, have been delayed by several months.

CEO Jim Taiclet said these payments are expected by June 30 and could continue to be delayed into the third quarter.

Lockheed’s rivals Northrop Grumman and General Dynamics are expected to report quarterly results later this week.

This week, Lockheed forecasts its 2024 profits to be in the $25.65 to $26.35 per share range.

LSEG data said analysts are expecting the company to attain an average profit of $26.62, as well as fourth-quarter net income of $1.87 billion, 2.4 percent down from last year, but on a per share basis, profits rose to $7.58 from $7.40.

In an interview with Reuters, Chief Financial Officer Jay Malave said that capital expenditures will remain high in 2024 because the company will continue to invest in building out production for weapons systems that are in high demand in Ukraine, such as the Guided Multiple Launch Rocket System (GMLRS), HIMARS and others.

Lockheed expects its 2024 sales to range from $68.50 billion to $70 billion, which is over analysts’ average expectations of $68.66 billion.